Bank of Baroda(BoB) Q2 results: Net profit doubles

 State-owned Bank of Baroda on Thursday reported a standalone net profit of Rs 1,678.6 crore for July-September quarter (Q2FY21) on the back of lower provisons. In the previous quarter of the current fiscal (Q1FY21), the lender had incurred a loss worth Rs 864.26 crore. On a yearly basis, PAT grew 128 per cent from Rs 736.6 crore.

On a consolidated basis, profit was Rs 1,771.22 crore for Q2FY21, as against a net loss of Rs 678.71 crore in the June quarter. In the year-ago period, however, consolidated net profit stood at Rs 853.41 crore. 

The numbers beat Street expectations by a huge margin. Analysts at Motilal Oswal Financial Services, for instance, had pegged the net profit at Rs 139.4 crore, while those at Phillip Capital had expected the PAT to stand at Rs 541.7 crore. 

Profit before tax (PBT) for the quarter under review jumped 126.33 per cent YoY to Rs 2,50.23 crore in Q2 from Rs 1,126.76 crore in Q2FY20. In the June quarter, pre-tax loss was Rs 864.26 crore.

Net interest income (NII) came in at Rs 7,507.53 crore for the quarter under review, rising marginally from Rs 7,028 crore income earned in Q2FY20. Sequentially though, the income increased from Rs 6,816 crore. Analysts at Phillip Capital had expected the NII to come in at Rs 6,887.4 crore.

Provisions and asset quality

Provisions set aside in the September quarter declined sharply to Rs 3,001.59 crore on a QoQ basis from Rs 5,627.7 crore set aside in Q1FY21. Of these, provisions for NPA stood at Rs 2,277.25 crore. In Q2FY20, provisions stood at Rs 4,209.16 crore.

"In accordance with the RBI guidelines, the bank was required to make provisions of not less than 10 per cent of the outstanding advances in respect of borrower account where asset classification benefit has been granted. However, the Bank had made provision at 20 per cent in March 31, 2020 while w.e.f. April, 2020 provision at 10 per cent is made wherever the said benefit is extended to the borrowers," the management said in a statement.

As per the details provided by the bank, loan accounts worth Rs 85,898.55 crore are under moratorium as of September 30, 2020. Loan accounts worth Rs 14,022.5 crore were classified at the end of Q2FY21.

As per the RBI's June 7 circular, the bank has made additional provision of Rs 633 lakh during the quarter ended September 30, 2020 and holds total provision of Rs 3,615.50 crore as on September 30, 2020. 

The asset quality improved margianlly to 9.14 per cent in Q2FY21 from 9.39 per cent in Q1FY21. Net NPA, meanwhile, was at 2.5 per cent, down from 2.8 per cent. If the bank had declared those accounts as NPA, which it has not classified as bad loan due to the Supreme Court's ruling, the GNPA would have come in at 9.33 per cent and NNPA would have been 2.67 per cent.

Non-Performing Assets Provisioning Coverage Ratio (including floating provision) is 85.35 per cent as on September 30, 2020. In absolute terms, GNPA was Rs 65,698 crore in Q2FY21, down from Rs 69,132 crore in the June quarter of FY21. NNPA slipped from Rs 19,449.68 crore in Q1FY21 to Rs 16,794.93 crore.